Ito van Lanschot had struggled for the past 25 years trying to deliver complete and accurate daily reports on exposures and performance in the commodities industry. Born out of frustration he founded Commodity Services and Solutions in 2010, which was renamed TRADESPARENT in 2016, a software solution for the commodities industry that just works, run by experts who understand the future trends of the industry, its language, business rules and idiosyncrasies.
Read the article with Ito van Lanschot, managing director and founder of TRADESPARENT, explaining the story behind and the challenges he faced the past 25 years as a business professional active in the commodities industry.
A must read for every analyst, trader, compliance officer, risk manager, and/ or IT officer who shares the pain of manually driven approaches for timely, accurate and efficient monitoring and reporting in the commodities trade and processing industry.
Ito van Lanschot - After 25 years operating in the Agri-trading and processing industry, I was headhunted by a US energy company to manage their European power generation and wholesale business which included 2400 MW, 14 plants power and heat portfolio in the Netherlands. The mandate was to convert this former utility company into a commercial and dynamic organization.
During my time as trader and manager in the agroindustry, I spend countless hours to run administrative processes to produce purchases and sales overviews, exposure and estimated p/l reports manually and with Excel. Automation was for the finance departments and we, the commercial front office, were working with Lotus Notes and electronic Reuter screens.
“ Reporting was taking endless hours, accumulating information and data, input in Excel, apply formulas and then spend again endless hours, solving errors, and discussing with other departments, offices and controllers whose figures and reports were right. What a waste of time and money!”
Since our industry prides itself of traditions and way-of-doing things, this process continues in most companies. When I started to work for the energy company, I entered the world of technology where engineers were running the show instead of traders in the world where I was coming from. In other words processes were structured and executed in a disciplined manner. As products and contracts were fixed for very long-term (PPAs for power were often for 10 years and for gas for 20 or more years) so that they needed to be modeled and structured so that risk, exposure and performance could be assessed and managed.
Since Gas and E-programs needed to be properly planned and timely presented to grid-company (on a daily basis for the next day for balancing purposes), technology played a crucial role to make sure that the E- program was properly executed otherwise huge fines has to be paid. Therefore, like in the finance industry, reporting was done on a real-time basis.
It was an excellent process and a good organization in a disciplined industry but rigid and not very dynamic so that its products and services came with a high price and wide margins for risk mitigation and little flexibility.
Due to the liberalization of the power markets in the late 90’s and early 00’s, the commercial elements of trading gas and power were added to make the process more dynamic and seek for portfolio optimization opportunities both for plants and products. For this we developed new products such as the trading of the spark spread and reversing the spark spread (buying power and selling the gas in the liberated markets when the conversion margins are below cost).
By that time the energy industry suffered from the demise of Enron but it had given a wealth of experience and insights in new methods and ways of working, which I put to practice upon my return to the Agri- industry.
I took along a number of professionals from the energy industry, which needed to adapt to the informal and rather opportunistic culture of the agri-trade. Through careful but persistent change management, the organization adapted itself to new disciplines, which resulted in excellent results for the company.
The largest challenge though was to find a software vendor, which had the necessary solution and who understood the agri- business. A careful, lengthy and costly acquisition process was started which turned out to be disastrous as for all the promises of the various vendors, it became apparent that their product was often still in development stage and had not matured and worst of all they understood little to nothing of the business, let alone of the new trends and dynamics of portfolio optimization. The implementation processes were lengthy and hurting the daily operations and despite of all the rigid planning, always substantially over budget both in time and costs.
“It was then that I realized that there was a need and an opportunity to develop software for the commodity industry, which was made by commodity industry experts who understood the future trends of the industry, its language, business rules and idiosyncrasies” .
In 2010 I founded Commodity Services and Solutions, which was renamed TRADESPARENT in 2016, a successful software developer, vendor and advisor for the commodity industry. Within a short period of time, we were up and running providing advice and solutions to Roquette Fréres SA, in Lille, France, an esteemed and supportive client for all these years. Later followed by BayWa, Bunge, and Cargill. All of our clients prize our products and services for its innovation, non-intrusive implementations and expertise.
ABOUT ITO VAN LANSCHOT
Managing Director & Founder
Ito van Lanschot is a business developer, strategist, investor, leader, risk and commodity expert. Previously Ito was CEO of BayWa Agri Supply and Trade and CEO of Nidera where he was directly responsible for the international trading and processing business and operations for the grain and oilseeds complex, freight, energy business and the development and implementation of its global risk group.